A social enterprise is defined as any business venture created for a social purpose--mitigating/reducing a social problem or a market failure--and to generate social value while operating with the financial discipline, innovation and determination of a private sector business.1

Social enterprises use entrepreneurship, innovation and market approaches to create social value and change; they usually share the following characteristics:

1. Social Purpose - created to generate social impact and change by solving a social problem or market failure;
2. Enterprise Approach – uses business vehicles, entrepreneurship, innovation, market approaches, strategic-orientation, discipline and determination of a for-profit business;
3. Social Ownership – with a focus on public good and stewardship, although not necessarily reflected in the legal structure.

Social enterprises may be structured as a department within an organization or as a separate legal entity, either a subsidiary nonprofit or for-profit.

The purpose of the social enterprise may be:

1. an additional funding mechanism for the organization’s social programs or operating costs;
2. a sustainable program mechanism in support of the organization's mission; or
3. a leadership development mechanism in support of social innovation.

Used for either purpose, business success and social impact are interdependent.

Social enterprises can be classified based on their mission orientation...

...as well as the level of integration between social programs and business activities.

• 1Definition from Virtue Ventures LLC